Axis Triple ‘Dis-Advantage Fund
A multi-asset allocation strategy is one of the most efficient strategies for Indian retail investors. In this strategy, assets are dedicated to a minimum of three asset classes such as equity, debt, gold, etc. According to Securities and Exchange Board of India (SEBI), multi-asset allocation funds are those that invest in at least three asset classes. Further, they need to allocate a minimum of 10 per cent each in all three asset classes.
Talking about Axis Triple Advantage Fund, it adopts a multi-asset allocation strategy with an objective of capital appreciation over the long-term by investing in a diversified portfolio of equity, fixed income and gold Exchange Traded Funds (ETF). Sounds nice, right? However, there is a catch. Its asset allocation itself acts towards its disadvantage.
Its asset allocation
|
Instruments
|
Indicative allocations
(per cent of total assets)
|
Risk Profile
|
|
Minimum
|
Maximum
|
High/Medium/Low
|
|
Equity and Equity Related Instruments
|
30
|
40
|
High
|
|
Debt and Money Market Instruments
|
30
|
40
|
Low to Medium
|
|
Gold Exchange Traded Funds
|
20
|
30
|
Medium
|
The above asset allocation is as per its scheme information document (SID). It says that at all times, its allocation towards equity and debt won’t fall below 30 per cent and in case of gold; it won’t fall below 20 per cent.
As we can see from the above graph, even when the pandemic struck, it never lowered down its equity allocation. It has always been above 60 per cent. Further, rather than shifting to gold and debt, it increased its cash holding. This resulted in the underperformance of the fund. Further, most of the funds never lower down their equity allocation below 65 per cent, to sustain the equity-like tax structure. However, from the investors’ perspective, rather than just saving tax, it should have been true to the multi-asset allocation strategy.
The above graph clearly shows that, though it was able to beat S&P BSE 500 most of the time, it has also underperformed it for almost 2.5 years. On the contrary, its peer SBI Multi-Asset Allocation Fund has consistently performed well and beat S&P BSE 500. Not just that but it has also performed better than Axis Triple Advantage Fund on a consistent basis. Such a performance of SBI Multi-Asset Allocation Fund is due to its asset allocation. According to its SID, it can allocate assets to equity in the range of 10 per cent to 80 per cent. Further, it presently holds 45 per cent in equity as against 66 per cent by Axis Triple Advantage Fund.
Hence, if you are looking to invest in a multi-asset allocation strategy, then invest in SBI Multi-Asset Allocation Fund over Axis Triple Advantage Fund.